Extended auto warranties are purchased by vehicle owners to provide protection from unexpected high-cost repair bills. The idea is simple; pay thousands of dollars to a warranty company, and if your car ever needs to be repaired, your policy will then cover those costs. Since the extended warranty can be financed, those who live on a weekly or monthly budget can better prepare for a big problem that would upset their finances. But what if you pay those thousands of dollars, and then the extended warranty company won’t pay the repair bills? There are many reasons owners report for why such a company would not pay for a needed repair. We have read endless vehicle owner complaints to get a feel for the most common reasons these companies did not pay. Here are some trends we found:
Here are some ways that you can avoid purchasing an extended vehicle contract that will leave you high and dry when the time for that scary repair comes around.
|Extended Warranty Companies To Avoid*||Extended Warranty Companies To Consider*|
|US Automotive Protection Services||CARCHEX|
|Department of Warranty Services||Endurance|
*Based on Better Business Bureau Listings
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Many organizations want to warn you about warranty scams. The Federal Trade Commission (FTC) is one of them. The FTC offers advice on ways to avoid the worst scams. One of the red flags that the FTC warns about is a company that pretends to be your brand’s manufacturer. The mailing, text, or phone call pitch goes something like, “Your 2016 Forester’s warranty is about to expire! Take action now to keep the coverage!”
The way the pitch is worded leads you to believe that it is your brand reaching out, when it is not. These promotions are created using data the scammer can purchase to get a bit of info on your car. All they need is the make, model, and year to determine when to target you.
The FTC Warns you that if you respond to one of these pitches, “...you’re likely to hear high-pressure sales tactics, as well as demands for personal financial information and a down payment, before you get any details about the service contract. And if you buy a service contract, you may find that the company behind it won’t be in business long enough to fulfill its commitments.”
One resource that assists consumers in shopping for extended warranties is the Better Business Bureau (BBB). BBB provides help in a number of ways. The first is its BBB Rating. This is an alphabetical scale starting with A+ and going down to F (just like in school). The BBB rating does not correlate directly with customer complaints or reviews of a given business. However, the rating is a helpful way to gauge if the business is real or a scam.
Another tool BBB provides is a listing of the complaints against a warranty company, a response from the company to that complaint, and BBB’s brief commentary on if it was resolved or not. Some of the detailed responses from the companies are very interesting and seem valid.
The third way BBB provides help is a warning not to do business with a given company. This is usually due to a high frequency of unresolved complaints. Here is a listing of some of the companies BBB feels are the worst extended auto warranty companies and why BBB feels that they should be avoided:
CarShield - Pattern of Complaint: BBB is advising consumers to use caution when considering doing business with CarShield, an Auto Service Contract company. BBB has received a pattern of consumer complaints alleging misleading sales and advertising practices, rude customer service, failure to cover needed repairs, difficulty cancelling a policy and obtaining a refund, and that the firm made harassing calls or sent harassing mail solicitations.
Department of Warranty Services - Pattern of Complaint: BBB files indicate that this business has a pattern of complaints concerning advertising issues. Specifically, consumers allege receiving misleading advertisements regarding vehicle warranty services from the Department of Warranty Services. In addition, consumers state the advertisement gives the impression the customer is in need of warranty coverage even if they already have coverage through another provider.
US Automotive Protection Services - Pattern of Complaint: Better Business Bureau is advising consumers to use caution when considering doing business with US Automotive Protection Services. BBB has received a pattern of consumer complaints alleging misleading sales tactics, failure to cancel contracts after a consumer has requested cancellation, high pressure sales tactics, failure to remove consumers from mailing and calling lists when requested, failure to provide refunds and poor customer service.
One place to begin shopping for an extended warranty is with the manufacturer who built your car. For example, if you own a Subaru and you plan to keep it beyond the 3-year / 36,000-mile new car limited warranty it came with, why wouldn’t you start with the company that you already know and trust? All brands will sell you an extension to their warranty. Do note that you should reach out before that initial new car warranty period ends.
Whichever company you consider, be sure that the most likely failures and problems will be included in the warranty you purchase. J.D. Power and Associates catalogs the problems that owners report. The group finds that vehicle infotainment system problems are the most commonly reported vehicle system.
Another way you can try to learn what might go wrong is to join forums that discuss your specific make and model. Consumer Reports also has a very detailed listing of most commonly-reported failures by year, make, and model, but it requires a subscription to access. CarComplaints.com offers similar data at no cost.
Before you purchase a Powertrain Warranty extension, or any package that does not cover the majority of the vehicle, step back and ask yourself how you will feel if you buy this expensive policy and the first two things that fail are not included in the coverage you selected.
Although we pointed readers to their manufacturer as a place to start when considering an extended warranty, most car companies won’t sell a policy once the vehicle is out of its new car limited warranty coverage period. So, third-party warranty companies are the only place to turn.
There are third-party warranty companies that have earned a high BBB rating, and positive reviews from owners of the policies. Check out Car Talk’s 5 Best Extended Car Warranties for more details. Two companies we often point to as having high ratings are CARCHEX and Endurance.
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Car Talk has identified the top five extended warranty companies as CarChex, Endurance, Ally, Chrysler Warranty Direct, and GM Extended Protection Plan.
The longest original factory vehicle warranties are offered by Genesis, Hyundai, Kia, and Mitsubishi. Each has a new car limited warranty period of 5-years / 60,000miles and the Powertrain Warranty extends for the first owner to 10-years / 100,000-miles. Jaguar also has a five-year, 60,000-mile comprehensive warranty period, but no added Powertrain coverage.
Yes, in some areas, AAA does offer extended vehicle warranty policies.
For owners who live on a weekly or monthly budget extended warranties can make sense. However, Consumer Reports has found from surveys that most extended vehicle warranty owners do not recoup as much in repair coverage as they spend on the policy.
The best way to get a good price is to compare offers. We recommend reaching out to...